Soaring energy bills – where is the evidence?

Energy bills are not going up.

Sounds like an odd thing to say – especially a couple of weeks after the introduction of the energy price cap, and announcements that more people are switching suppliers than ever before to avoid surging prices.

And set against the long-held school of thought that it would cost more to power the nation renewably than from fossil fuel sources, it may seem even more surprising.

But it is true.

Now, new data on household spending from the Office for National Statistics adds even more weight to the notion that the shift away from dirty energy is not hitting UK billpayers in the pocket.

Released in late January, the most recent ONS data shows that during the 2017/18 financial year (FY17/18), the average weekly spends on gas and electricity were £9.80 and £11.40, respectively (Figure 1).

With total weekly domestic expenditure averaging £572.80 in each home across the nation, these figures each represent less than 2% of household spending. And while the average spend on electricity has increased by 30p per home compared with the previous financial year, they are significantly lower than just a few years ago.

In fact, since FY2014/15 (the oldest detailed ONS data available), the amount spent by all British homes on gas and electricity has fallen by 9%, down £57million to £576 million. Energy bills have also fallen as a proportion of total household spending, down from 4.2% to 3.7%.

And while figures from 2014 were pushed up by high fossil fuel prices, since then domestic expenditure on energy has been virtually constant, as Figure 1 shows.

More renewables, higher bills?

When compared to ‘warnings’ that sourcing more energy renewably would lead to higher bills, these figures make for interesting reading.

Back in 2014, coal accounted for 30% of British electricity, with a similar proportion from gas. Wind provided 9.5% of our power, and solar just 1.2%. Fast forward to 2017, however, and coal generation had fallen to less than 7% of the total, with wind and solar output virtually doubling to nearly 20% of electricity output.

It’s not just the cost of generation, we were warned, but also the cost of balancing a grid that increasingly leans on intermittent renewables that would force households to pay ever more for the energy they consume.

Yet, looking at the numbers, it is clear that these warnings are not in line with what is happening on the ground.

In truth, the success of energy efficiency measures in curbing how much energy we use has more than offset any price rises. Better-performing gas boilers, better insulated and less draughty homes, and more efficient products and appliances are all contributing, applying downward pressure on household energy bills.

The CCC found that efficiency measures have shaved £290 from the typical household energy bill each year since 2008, more than offsetting the social and environmental levies that fund renewable power and support for low-income and vulnerable households.

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